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Nomisma goes to the crowd to fund next phase of growth

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Cloud practice suite Nomisma is running a crowdfunding campaign to finance a push into the accounting software mainstream – and has already hit its original target of £500,000.

15th Jun 2022
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Billing itself as a “cloud-based and affordable” alternative to some of the larger suite solutions in the accounting industry, integrated cloud suite Nomisma plans to use the investment to ramp up its sales and marketing efforts.

Nomisma’s investment pitch cites a long-standing gap between client-facing “front office” bookkeeping and payroll packages and “back office” tools used by accountancy practitioners for final accounts, tax and practice management – with Nomisma as a credible ‘bridge’ product spanning the two categories.

The pitch states that several factors will force practices to address the front office/back office gap in the coming years, including the commoditisation of client bookkeeping work, with margins squeezed, rates capped by competition and labour-intensive delivery, and the imminent arrival of Making Tax Digital for income tax self assessment (MTD ITSA).

Currently used by more than 500 UK practices, Nomisma is an end-to-end cloud suite built for accounting firms and SME clients, with a single interface covering bookkeeping, payroll, final accounts, tax and company secretarial, with client onboarding and CRM functionality.

Nomisma began its crowdfunding campaign at the end of May looking to raise £500,000 – a target representing 3.18% of equity at a share price of £4.25 and pre-money valuation of £15,205,939.

The investor deck values the tool’s current addressable market as above £900m – extrapolating the data from sources including five of the largest suppliers whose revenue can be most clearly attributed to UK SME and accountancy practice software.

Nomisma’s pitch is obviously working for its target audience, as at the time of writing the platform sits at a total of more than £514,000 raised with just over two weeks remaining.

The right time to expand

Nomisma CEO Simon Guest told AccountingWEB that with an expanding development team and an increasingly sophisticated product set, the time was right for the package to push forward.

He said that the firm had chosen the crowdfunding route to investment for two reasons: to spread the word about Nomisma and to show practices they were in the market for the long term.

“It’s about letting people know we’re here and showing them we’re serious,” said Guest. “We’re in the market for the long term, not arriving in a blaze of glory only to not stay the course.

“We’ve been ticking along in the background for seven or eight years and have built up an element of trust,” he continued. “Your customers have to have confidence in you as a supplier, as they’re recommending you to clients and trusting you don’t embarrass them. Customers who start with us succeed, use more of our software and it’s a virtuous circle”

Built for practices

Founded in 2014 as an in-house system by DNS Accountants managing director Sumit Agarwal, Nomisma was originally intended to help make its compliance work more profitable. In 2020 the product underwent extensive work to extend its functionality and it relaunched to the open market in 2021, showing revenue growth of 72% year-on-year to £514k in FY2022.

“We’re built for practices, and practitioners can see that,” said Guest. “In our manifesto earlier this year, we thought it was important to signal we’re not looking to sell around practitioners. We want to allow them to work effectively and help clients, not be a short-term channel for software suppliers to eventually cut practices out of the loop and supply services direct to small businesses.”

According to Guest, one of the major concerns they’re seeing in the small practice market at the moment is around efficiency. “A wave of small and slightly larger practices are now having to actively think about MTD ITSA,” he said. “What will this mean for practice and my clients. Will I take the blame for this change to the tax regime? And what will I have to put in place to deal with this?

“Any friction in a practice’s process will challenge the margins – you can’t afford to put your smallest clients on big-name cloud providers, and even if you do they’re generally a mixed set of products acquired and bolted together.”

Guest believes that as a cloud suite designed specifically to work with accountancy practices to drive efficiency and marketed on its affordability, Nomisma is in a unique position to help firms solve this challenge.

AccountingWEB view

With an estimated 44,000 accounting and bookkeeping practices servicing a possible 5.9m small businesses in the UK, and with MTD ITSA approaching fast, it’s understandable that investors see potential in the accounting tech market.

Mammoth private equity groups such as Hg Capital, which backs the likes of IRIS, Bright Group and Dext (and practice group Azets) have staked a claim in recent years, and the success enjoyed so far by Nomisma’s crowdfunding shows there is an appetite for an affordable alternative to the established players.

However, the move comes at a busy time in the practice suite world. Along with the continued rise of cloud-native platform Capium, long-term desktop suites BTCSoftware and IRIS have recently announced their move to the cloud, while accounting engines such as Sage, Xero and QuickBooks have been busy building their platform solutions for accountants (with varying degrees of success).

How Nomisma will fare attempting to expand in this crowded market will depend on how well they can cut through the noise created by well-funded rivals and help meet the needs of their small-practice target market – and the crowdfunding move is a good start on this journey.

 

Replies (5)

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By Paul Crowley
15th Jun 2022 11:22

Definitely look at the published accounts on companies house for a few years as part of due diligence.
I commented on them once before and Aweb removed my comment.
Quite difficult to find the correct company, lots of companies use the name.

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By Paul Crowley
15th Jun 2022 11:29

Per Article link
'Nomisma is a true end-to-end SaaS suite built for accounting firms & SME clients, with a single interface covering everything from bookkeeping and payroll to tax and full CRM. With 600+ practices enrolled, using it on 10,000 of their clients, Nomisma are now raising to ramp up sales and marketing.'

Investment to be spent on marketing? Not development?

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Replying to Paul Crowley:
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By Hugo Fair
15th Jun 2022 11:37

That's what used to be known as an 'Exit Route' plan ... no investment in clients (development, delivery or support) - everything going into ramping up turnover.

Thanks (2)
Replying to Hugo Fair:
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By Paul Crowley
15th Jun 2022 12:25

Just had a look at the accounts
The accounts that I commented on (ye 2021) have been ammended, March 2022. Addition of a comment that development work is outsourced. (I commented on so few employees and the not attractive look of the stretched lines in the notes section.)
The paper submission of ammended accounts looks SO much better
Still shows the same negative retained earnings.

Cannot see the croud funding as an exit plan

That is assuming I looked at the correct company
Nomisma Solution Ltd. Formerly Nomisma Ltd, name changed 11 October 2021

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By MCV71
15th Jun 2022 11:57

Yeah, I got burnt before being a pawn for Taxfiler to then sell out. Not again.

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